iPad? - it's far too large and expensive. We want to use 7" readers because they are easy to carry, and we don't want to spend much more than $200 on our readers. Oh, and the iPad is locked down so that users are forced to add content via the Apple store, so paying Apple their 33% tax.

You're talking about content bought from apps, which is utterly irrelevant to the OPs question, which is about reading PDFs. There's no problem at all loading your own content onto an iPad, and it's no more "locked down" in that regard than an Android device is.